The Ministry of Justice has recently announced that it will consult on plans to extend the scope of the criminal offence of a corporate ‘failing to prevent’ beyond bribery and tax evasion to other economic crimes including money laundering.
In recent years, law enforcement agencies have struggled to prosecute corporations for money laundering, false accounting, and fraud.
The recently announced consultation will seek views and evidence to assess whether changes in the law could allow the courts more effectively to prosecute corporate economic crime and will explore whether the ‘failure to prevent’ model should be extended to complement existing legal and regulatory frameworks. Politicians and law enforcement speak with a single voice signalling their desire to introduce such an offence.
The consultation follows the announcement in May 2016 by the Prime Minister, David Cameron, to bring forward a criminal offence for corporations who fail to stop their staff facilitating tax evasion and two recent prosecutions for the offence of failure of a commercial organisation to prevent bribery on its behalf. The “failure to prevent” model is regarded as an effective criminal charge and an invaluable deterrent to criminal conduct.
At the recent international conference on corruption and bribery the Prime Minister announced that the UK and 20 other countries – including major financial centres such as the US, Switzerland, the UAE, and Singapore – are bringing together the public and private sectors to fight money laundering. These intelligence sharing partnerships will apparently unite banks, regulators and law enforcement to tackle financial crime by exchanging and analysing information on illicit financial flows.
Countries are already strengthening existing links and developing models like the UK’s Joint Money-Laundering Intelligence Taskforce (JMLIT), whose work has led to arrests, the freezing of funds and the closure of bank accounts linked to crime. The JMLIT brings together the National Crime Agency, City of London Police, Financial Conduct Authority, HMRC and a number of domestic and international banks (including Barclays and HSBC) to share information and take concerted and effective action .
As the flow of information between countries and international law enforcement co-operation deepens, the risk of exposure to prosecution of both individuals and corporations has just been raised. However, appropriate and early action by corporations in corporate governance, boardroom culture and the drafting of policies and procedures designed to prevent money laundering can provide adequate protection – even where an offence has been committed.